OVERVIEW OF FEDERAL AGENCY RULEMAKING

Transcription

1 PART I OVERVIEW OF FEDERAL AGENCY RULEMAKING The extent to which the administrative law of the national government is to be found in executive regulations is not ordinarily appreciated. Frank J. Goodnow THE PRINCIPLES OF ADMINISTRATIVE LAW IN THE UNITED STATES 87 (1905) 1

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3 PART I OVERVIEW OF FEDERAL AGENCY RULEMAKING Passage of the Administrative Procedure Act (APA) in established the basic framework of administrative law governing federal agency action, including rulemaking. While the provisions of the APA continue to be central to the rulemaking process, a number of developments have, to some extent, undermined the original unifying effect of the APA. Beginning around 1970, Congress enacted a variety of specific regulatory statutes that mandated rulemaking procedures to supplement or supersede the APA s provisions. 2 In addition, many administrative agencies significantly modified their rulemaking procedures in response to court-mandated refinements and the increasing complexity and controversial nature of many rulemakings. 3 Succeed- 1. Pub. L. No. 404, 60 Stat. 237, ch. 324, 1-12 (1946). Codified by Pub. L. No (1966) in 5 U.S.C , , 1305, 3105, 3344, 5372, See The Administrative Procedure Act: A Fortieth Anniversary Symposium, 72 VA. L. REV. 215 (1986) (discussing the history and contemporary impact of the APA on the Act s fortieth anniversary). This Guide refers to the sections in Title See, e.g., Federal Trade Commission Improvement Act, l5 U.S.C , 50, 57a-58; Consumer Product Safety Act, 15 U.S.C , , ; Occupational Safety and Health Act, 29 U.S.C ; Mine Safety and Health Act, 30 U.S.C , , , , These statutes are often referred to as hybrid rulemaking statutes, because they combine elements of both formal and informal rulemaking. Stephen F. Williams, Hybrid Rulemaking Under the Administrative Procedure Act: A Legal and Empirical Analysis, 42 U. CHI. L. REV. 401 (1975) (discussing creation of hybrid rulemaking). The term hybrid rulemaking was anticipated prior to publication of the Williams article. Bruce McAdoo Clagett, Informal Action Adjudication Rule Making: Some Recent Developments in Federal Administrative Law, 1971 DUKE L.J. 51, 70 (urging agencies to fashion hybrid or conglomerate procedural devices ). See also infra subsec. (C) for a discussion of hybrid rulemaking. 3. See, e.g., Vt. Yankee Nuclear Power Corp. v. Nat. Res. Def. Council, 435 U.S. 519, 524 (1978) (reaffirming the principle that [a]gencies are free to grant additional procedural rights in rulemaking in the exercise of their discretion 3

4 4 A Guide to Federal Agency Rulemaking ing presidents, beginning with Nixon, have, by executive order, imposed procedural and analytical requirements on rulemaking by executive branch agencies that went beyond procedures required by the APA. 4 Additional regulatory reform initiatives enacted by Congress have also prescribed procedural and analytical requirements for rulemaking. The combination of these add-ons to the rulemaking process has led numerous commentators to fret over the ossification of rulemaking. 5 At the same time, a trend toward deregulation began in the late 1970s and has continued through the subsequent decades ). For an illuminating history of rulemaking s collision with vigorous judicial review in the D.C. Circuit, see Reuel Schiller, Rulemaking s Promise: Administrative Law and Legal Culture in the 1960s and 1970s, 53 ADMIN. L. REV. 1139, 1141 (2001). 4. The most important of these is Exec. Order 12,866, 3 C.F.R 644 (1993 compilation), reprinted in 5 U.S.C. 601 and Appendix B to this Guide. Its stated purpose is to enhance planning and coordination with respect to both new and existing regulations; to reaffirm the primacy of Federal agencies in the regulatory decisionmaking process; to restore the integrity and legitimacy of regulatory review and oversight; and to make the process more accessible and open to the public. Id. Exec. Order 12,866 and other more recent executive orders governing agency rulemaking are discussed infra subsec. (D) and Part III, ch. 2(A), (G). 5. See, e.g., Thomas O. McGarity, Some Thoughts on Deossifying the Rulemaking Process, 41 Duke L.J (1992); Richard J. Pierce, Jr., Seven Ways to Deossify Agency Rulemaking, 47 ADMIN. L. REV. 59 (1995). One example of how rulemaking may be taking longer is recounted in a report by the Inspector General of the Department of Transportation, which found that the time taken to complete a rule increased from an average of 1.8 years and a median of 10 months in 1993, to an average of 3.8 years and a median of 2.8 years in Moreover, the number of significant rules issued fell from 45 in 1993 to 20 in DOT, OIG AUDIT REPORT: THE DEPARTMENT OF TRANSPORTATION S RULEMAKING PROCESS 7, Report No. MH (July 20, 2000), available at mh pdf. However, a follow-up report in 2004 found improvements in timeliness and conceded some problems with measurement with a small sample. See DOT, OIG AUDIT OF DOT S RULEMAKING PROCESS AND TRACKING SYS- TEM 2-3, Report No. SC (Mar. 2, 2004), available at There is extensive literature on the subject of deregulation and its impact on agency rulemaking. See, e.g., Thomas O. McGarity, Regulatory Reform in

5 Part 1: Overview of Federal Agency Rulemaking 5 One of this Guide s major purposes is to provide agency rulemakers, participants, and others interested in agency rulemaking with an integrated view of the procedural requirements as they relate to each stage of the rulemaking process. Before embarking on a stage-by-stage discussion, however, the major events in the development of the federal rulemaking process will be summarized. A. Rulemaking Under the Administrative Procedure Act The APA was the product of a struggle between interests that supported the programs of the New Deal agencies and those that were afraid or suspicious of the power given those agencies. 7 One of the APA s major accomplishments was the establishment of minimal procedural requirements for many types of agency proceedings. However, the APA did not require as earlier bills would have that all administrative action follow a single, rigid procedural model. 8 Instead, the APA recognized and adopted various agency procedures that are the Reagan Era, 45 MD. L. REV. 253 (1986); Robert R. Rabin, Federal Regulation in Historical Perspective, 38 STAN. L. REV. 1189, (1986); Merrick B. Garland, Deregulation and Judicial Review, 98 HARV. L. REV. 505 (1985); Marianne K. Smythe, Judicial Review of Rule Rescissions, 84 COLUM. L. REV (1984); ROBERT E. LITAN & WILLIAM D. NORDHAUS, REFORM- ING FEDERAL REGULATION (1983); STEPHEN BREYER, REGULATION AND ITS REFORM (1982). 7. See George B. Shepherd, The Administrative Procedure Act Emerges from New Deal Politics, 90 NW. U. L. REV (1996); Jeffrey S. Lubbers, APA Adjudication: Is the Quest for Uniformity Faltering?, 10 ADMIN. L. J. AM. U. 65 (1996); Paul R. Verkuil, The Emerging Concept of Administrative Procedure, 78 COLUM. L. REV. 258, (1978). See also Dennis R. Ernst, Dicey s Disciple on the D.C. Circuit: Judge Harold Stephens and Administrative Law Reform, , 90 GEO. L.J. 787 (2002) (detailing pre-apa history). 8. The need for procedural variety and flexibility was shown by the excellent empirical research conducted by the Attorney General s Committee on Administrative Procedure, in existence from and chaired by Dean Acheson. See generally ATTORNEY GENERAL S COMMITTEE ON ADMINISTRATIVE PRO- CEDURE, FINAL REPORT ON ADMINISTRATIVE PROCEDURE IN GOVERNMENT AGENCIES, S. Doc. No (1941).

6 6 A Guide to Federal Agency Rulemaking commonly characterized as formal adjudication, formal rulemaking, informal adjudication, and informal rulemaking. The emphasis in this Guide is on informal rather than formal rulemaking. Formal rulemaking is triggered only where a statute other than the APA requires a rule to be made on the record after opportunity for an agency hearing. 9 Although formal rulemaking procedures are discussed in Part II, Chapter 1(B), they will not be analyzed in detail in this Guide, as they are seldom used except in some ratemaking and food additive proceedings. Section 553 of Title 5, United States Code, is the APA s general rulemaking section; rulemaking governed by it is commonly called informal, APA, or notice-and-comment rulemaking. 10 The noticeand-comment label derives from the fact that section 553 requires (1) publication of a notice of proposed rulemaking, (2) opportunity for public participation in the rulemaking by submission of written comments, and (3) publication of a final rule and accompanying statement of basis and purpose not less than 30 days before the rule s effective date. It is important to stress that these requirements are the procedural floor below which an agency may not go in prescribing procedures for a particular rulemaking. The APA s drafters contemplated that [m]atters of great import, or those where the public submission of facts will be either useful to the agency or the protection to the public, should naturally be accorded more elaborate public procedures. 11 As discussed below, 12 however, even the procedural floor set in 9. 5 U.S.C. 553(c). 10. Professor Herz has noted the increasing tendency of courts and commentators to blur the distinction between formal and informal rulemaking. He described the more frequent use of the oxymoronic phrase formal noticeand-comment and ascribed it to the facts that (1) traditional formal rulemaking has virtually disappeared, (2) agencies increasingly rely on policy statements, where the procedure is even less formal, and (3) the Supreme Court s jurisprudence on the Chevron case (discussed in Part IV) has introduced different notions of formality. Michael Herz, Rulemaking Chapter, DEVELOPMENTS IN ADMINISTRATIVE LAW AND REGULATORY PRACTICE , at 144 (Jeffrey S. Lubbers ed., 2004). 11. REPORT ON THE ADMINISTRATIVE PROCEDURE ACT, S. REP. NO , at 15 (1945). 12. See infra Part II, ch. 1(D).

7 Part 1: Overview of Federal Agency Rulemaking 7 section 553 does not apply to all rulemaking. Certain types of rules are exempted from some of these requirements, and entire classes of rules are totally exempted from APA notice-and-comment requirements. These exemptions reflect the APA drafters cautious approach to imposing procedural requirements on a myriad of agency functions, as well as their willingness, in some situations, to permit agencies a measure of discretion in fashioning procedures appropriate to the particular rulemaking involved. Congress s original willingness to leave to agency discretion rulemaking procedures exceeding the bare minimum required by section 553 partially eroded in the subsequent 60 years. Federal courts, Congress, and presidents have taken steps to require that agencies follow more rigorous procedures. While the Clinton Administration did take some steps to streamline presidential review of rules 13 and the Supreme Court put the brakes on judicial supplementation of procedures in Vermont Yankee Nuclear Power Corp. v. Natural Resources Defense Council (Vermont Yankee), 14 Congress has continued to require new procedural and substantive requirements, as has the Office of Management and Budget (OMB) under President George W. Bush. 15 These developments are discussed below in greater detail. B. Agency Rulemaking and the Courts Under the APA, persons aggrieved or adversely affected by agency actions, including agency promulgation of rules, have the right to seek judicial review of those actions. 16 Limited exceptions are provided specifically, where another statute precludes judicial review or the action is committed to agency discretion. 17 Most statutes establishing 13. See infra subsec. D. 14. Supra note OFFICE OF MGMT. & BUDGET, PEER REVIEW AND INFORMATION QUALITY PROPOSED BULLETIN (Aug. 29, 2003), available at inforeg/peer_review_and_info_quality.pdf. See infra subsec. D(3) U.S.C See generally infra Part IV (discussing judicial review of agency actions) U.S.C. 701(a). The scope of these exceptions has been the subject of court decisions, particularly in the contexts of suits to compel agency action. See discussion infra Part IV, chs. 2, 3.

8 8 A Guide to Federal Agency Rulemaking regulatory programs provide for court review of agency rules. 18 Unless the enabling statute contains a controlling judicial review provision, 19 reviewing courts generally follow section 706 of the APA in determining the scope of judicial review. Because the standards are stated in general terms, and the application of particular standards of review to specific types of proceedings is not defined clearly by the APA, the judicial review provisions have been the subject of much court interpretation. A number of landmark Supreme Court decisions have been important in explicating the relationship between the courts and administrative agencies in the rulemaking area. The first of these major decisions, Citizens to Preserve Overton Park, Inc. v. Volpe (Overton Park), 20 involved judicial review of the Secretary of Transportation s decision to authorize a road through a park. The Supreme Court first reaffirmed the presumptive reviewability of agency decisions by narrowly construing exceptions to the right to judicial review contained in section 701(a) of the APA. 21 The Court then applied the arbitrary and capricious test of section 706(2)(A), concluding that it must consider whether the [Secretary s] decision was based on a consideration of the relevant factors and whether there has been a clear error of judgment. 22 The Supreme Court defined the reviewing court s obligation in the following language: Although this inquiry into the facts is to be searching and careful, the ultimate standard of review is a narrow one. The court is not empowered to substitute its judgment for that of the agency. 23 Finally, the Court, refusing to accept as a basis for the agency decision post hoc rationalizations 18. See infra Part IV, ch Thus, for example, the Occupational Safety and Health Act provides that the agency s determination shall be upheld if supported by substantial evidence in the record considered as a whole. 29 U.S.C. 655(f). The meaning of the substantial evidence test as applied to informal or hybrid rulemaking has been explicated in a number of court of appeals decisions. See infra Part IV, ch. 2(A)(6) U.S. 402 (1971). 21. Id. at 410 (relying on Abbott Labs. v. Gardner, 387 U.S. 136 (1967), and holding that there must be clear and convincing evidence of legislative intent to restrict judicial review). 22. Id. at 4l Id.

9 Part 1: Overview of Federal Agency Rulemaking 9 contained in agency affidavits offered for purposes of litigation, stated that to perform its review responsibilities, it must have before it an administrative record that allows the full, prompt review of the Secretary s action. 24 Overton Park has had a lasting impact on court review of rulemaking even though the proceeding in that case was not rulemaking. 25 The courts continue to apply the presumption of reviewability of agency action, 26 and the Supreme Court s emphasis on the importance of the record to the review process has been extremely influential in the development of rulemaking procedures. The searching and careful standard of review described in the Overton Park decision, often called hard look review, has subsequently been applied by the courts to both substantive and procedural issues. 27 The application of hard look review to procedural issues in rulemaking resulted in a series of hybrid rulemaking decisions by the courts of appeals, principally the D.C. Circuit. These decisions mandated procedures in agency rulemaking that went beyond the minimum requirements of section Most of the early hybrid rulemaking judicial decisions involved rulemaking under statutes calling either for a decision after a hearing (but not on the record) or for substantial evidence review. 29 Although the courts refused to apply formal rulemaking procedures to these proceedings, they did remand final rules to the agencies for additional development of issues through cross-examination of witnesses or other unspecified procedural devices Id. at 419. The Secretary of Transportation s determination was set aside and remanded to the district court for plenary review. Id. at The action, which involved approval of building a specific road, would more appropriately be characterized as informal adjudication. 26. Cf. Heckler v. Chaney, 470 U.S. 821 (1985), and related cases infra Part IV, ch. 3 (discussing the issue of reviewability of agency inaction). 27. See infra Part IV, ch. 2(A)(3). 28. See Schiller, supra note Review of informal rulemaking under the APA is under an arbitrary or capricious standard. 5 U.S.C. 706(1). See infra Part IV, ch. 2, for discussion of these standards of review. 30. See, e.g., Portland Cement Ass n v. Ruckelshaus, 486 F.2d 375 (D.C. Cir. 1973), cert. denied, 417 U.S. 921 (1974) (remanding rule on stationary source

10 10 A Guide to Federal Agency Rulemaking In Vermont Yankee, 31 the Supreme Court substantially halted the development of judge-made common law of rulemaking procedure. In criticizing the D.C. Circuit s experimentation with hybrid procedure, the Court stated that... generally speaking [ 553 of the APA] established the maximum procedural requirements which Congress was willing to have the courts impose upon agencies in conducting rulemaking procedures. Agencies are free to grant additional procedural rights in the exercise of their discretion, but reviewing courts are generally not free to impose them if the agencies have not chosen to grant them. 32 Although Vermont Yankee precludes the invalidation of rules solely because an agency failed to use specific procedures not required by section 553, the decision did not overrule or overturn all the law of informal rulemaking that had been developed by the lower courts. And it did not affect continuing strict court review of agency adherence to the procedural requirements in the APA or in agency regulations. 33 The late 1970s began a rather sustained period of federal deregulation. 34 Deregulation was effected by legislation, 35 through administrative actions including amendment and repeal of rules and in standards under Clean Air Act for failure to make available test results and procedures used in creating standards, as well as failure to respond to manufacturers comments); International Harvester v. Ruckelshaus, 478 F.2d 615 (D.C. Cir. 1973) (remanding rule on emissions standards for light-duty vehicles for failure to properly consider availability of technology needed to meet standards). See also Symposium, The Contribution of the D.C. Circuit to Administrative Law, 40 ADMIN. L. REV. 507 (1988), for a discussion of these and related cases. 31. Supra note U.S. at 524 (footnote omitted). 33. See infra Part IV, ch. 2(A)(5) (discussing judicial review of agency procedures in issuing rules). 34. See sources cited supra note 6 for a discussion of deregulation. 35. See Motor Carrier Act of 1980, Pub. L. No , 94 Stat. 793 (codified in scattered sections of 49 U.S.C.); Airline Deregulation Act of 1978, Pub. L. No , 92 Stat (codified in scattered sections of 49 U.S.C.).

11 Part 1: Overview of Federal Agency Rulemaking 11 some cases through administrative inaction and delay. 36 In 1983, the Supreme Court, in Motor Vehicle Manufacturers Association v. State Farm Mutual Automobile Insurance Co. (State Farm), 37 reversed a major deregulatory action by the Reagan Administration. The Court vacated the National Highway Traffic Safety Administration s rescission of a previously issued rule requiring passive restraints (air bags and passive safety belts) in new automobiles. The Supreme Court first rejected the manufacturers argument that rescission of a rule should be treated on review as a refusal to promulgate standards, to which a very deferential standard of court review had traditionally been applied. 38 Concluding that the forces of change do not always or necessarily point in the direction of deregulation, the Court decided that the regulatory direction in which the agency chooses to move does not alter the standard of judicial review established by law. 39 Applying the arbitrary and capricious standard of review in State Farm, the Supreme Court asserted that the agency must examine the relevant data and articulate a satisfactory explanation of its action, including a rational connection between the facts found and the choice made. 40 As the Court stated: Normally, an agency rule would be arbitrary and capricious if the agency has relied on factors which Congress has not intended it to consider, entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference of view or the product of agency expertise The Occupational Safety and Health Administration s delay in issuing a field sanitation standard, which spanned several presidential administrations, is an example. See Farmworker Justice Fund v. Brock, 811 F.2d 613 (D.C. Cir. 1987) (decision ordering OSHA to issue standard within 30 days), vacated as moot after OSHA issued standard, 817 F.2d 890 (1987) U.S. 29 (1983). 38. See id. at Id. at Id. at 43 (quoting Burlington Truck Lines, Inc. v. United States, 371 U.S. 156, 168 (1962)). 41. Id.

12 12 A Guide to Federal Agency Rulemaking By insisting on taking a hard look at agency deregulatory decisions, and requiring rigorous justification for such actions, the Supreme Court limited the sweep of its earlier decision in Vermont Yankee. In State Farm the Supreme Court expressly distinguished the imposition of any additional procedural requirements upon an agency but, rather, required the agency to consider in its decisional process an available technological alternative the use of air bags only within the ambit of the existing Standard. 42 In a decision handed down a year after State Farm, the Supreme Court, in Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc. (Chevron), 43 upheld an Environmental Protection Agency (EPA) rule under the Clean Air Act 44 allowing states to treat all pollutionemitting devices within the same industrial grouping as though they were encased in a single bubble. Having determined that Congress did not have a specific intention concerning the interpretive issue before the Court, the Supreme Court decided that the only question on review was whether the administrative agency s view was a reasonable one. For a unanimous Court, Justice Stevens stated: Judges are not experts in the field, and are not part of either political branch of the Government. Courts must, in some cases, reconcile competing political interests, but not on the basis of the judges personal policy preferences. In contrast, an agency to which Congress has delegated policy making responsibilities may, within the limits of that delegation, properly rely upon the incumbent administration s views of wise policy to inform its judgments. While agencies are not directly accountable to the people, the Chief Executive is, and it is entirely appropriate for this political branch of the Government to make such policy choices resolving the competing interests which Congress itself either inadvertently did not resolve, or intention- 42. Id. at 50, 51. On remand, the Department of Transportation issued a new rule relating to passive restraints, 49 Fed. Reg. 28,962 (1984), which was upheld by the D.C. Circuit in State Farm Mutual Auto. Ins. Co. v. Dole, 802 F.2d 474 (D.C. Cir. 1986), cert. denied, 480 U.S. 951 (1987) U.S. 837 (1984) U.S.C. 7502(b)(6).

13 Part 1: Overview of Federal Agency Rulemaking 13 ally left to be resolved by the agency charged with the administration of the statute in light of everyday realities. When a challenge to an agency construction of a statutory provision, fairly conceptualized, really centers on the wisdom of the agency s policy, rather than whether it is a reasonable choice within a gap left open by Congress, the challenge must fail. In such a case, federal judges who have no constituency have a duty to respect legitimate policy choices made by those who do. 45 In adopting this highly deferential approach to agency legal interpretations in rulemaking, the Supreme Court in Chevron did not attempt to explain its somewhat different approach to factual review in the State Farm decision. 46 Although its relevance to agency rulemaking is somewhat limited, another Supreme Court decision of special significance to agencies in a period of deregulation is Heckler v. Chaney. 47 In that case, various petitioners challenged a decision of the Food and Drug Administration (FDA) not to investigate, under the Federal Food, Drug, and Cosmetic Act, the use by a state of lethal drugs to execute criminals. The Court upheld the FDA decision not to pursue the matter. In an opinion for a majority of the court, Justice Rehnquist stated that the presumption of reviewability of administrative agency action articulated in cases such as Overton Park did not apply to suits to force agency action. The Court concluded that decisions by agencies not to enforce or prosecute, whether by civil or criminal process, are generally committed to an agency s absolute discretion. This general unsuitability for judicial review, the Court said, results largely from the fact that decisions not to enforce often involve[] a complicated balancing of a number of factors which are particularly within [the agency s] expertise U.S. at See Part IV, ch. 2(A), for a discussion of these cases U.S. 821 (1985). 48. Id. at 831. These balancing factors include determining whether violations actually occurred, whether the agency s resources should be spent on the particular case, and how the case fits the agency s overall policies. Id. The

14 14 A Guide to Federal Agency Rulemaking Although the Supreme Court expressly stated that it was not deciding the reviewability of agency decisions not to initiate rulemaking proceedings, 49 the decision has been cited by parties in challenges to agency decisions not to initiate, or failures to complete, rulemaking. Several courts of appeals have considered the relevance of Heckler v. Chaney to rulemaking and have determined that Heckler v. Chaney did not preclude court review. However, these and earlier decisions hold that the standard of review of agency inaction or decisions not to initiate rulemaking should be highly deferential. 50 C. Agency Rulemaking and the Congress Congress has a pervasive influence on agency rulemaking activities. 51 In the first place, Congress grants the fundamental authority to an administrative agency to engage in policy making through rulemaking. The enabling regulatory statute typically will, at least in general terms, define the scope of agency authority 52 and describe any specific rulemaking procedures the agency must follow in addition to, or in lieu of, the minimum requirements of 5 U.S.C In hybrid rulemaking statutes, Congress mandates additional rulemaking other reasons for unsuitability mentioned by the Court are: (1) in refusing to enforce, the agency is not exercising its coercive power, and (2) refusals to enforce are analogous to decisions by a prosecutor not to indict, which have long been considered as the special province of the executive branch. Id. at Id. at 825 n On the other hand, Heckler v. Chaney does clearly affect the reviewability of agency rule enforcement (or lack thereof). See infra Part IV, ch. 3, for a discussion of these cases. 51. See JESSICA KORN, THE POWER OF SEPARATION: AMERICAN CONSTITUTIONALISM AND THE MYTH OF THE LEGISLATIVE VETO (1996) (presenting a comprehensive analysis of the many ways Congress exercises effective control over agency policymaking). 52. For example, in Bowen v. Georgetown Univ. Hosp., 488 U.S. 204 (1988), discussed infra Part III, ch. 7(A)(6)(c), the Supreme Court held that the Medicare Act, 42 U.S.C. 1395x(v)(1)(A), did not authorize the promulgation of retroactive cost-limit rules. The Court stated, It is axiomatic that an administrative agency s power to promulgate legislative regulations is limited to the authority delegated by Congress. 488 U.S. at 208.

15 Part 1: Overview of Federal Agency Rulemaking 15 procedures normally reserved for adjudication, such as requirements for informal public hearings, 53 cross-examination of witnesses, 54 more extensive statements of justification for proposed and final rules, 55 or the application of the substantial evidence test to court review of agency rules. 56 The inclusion of these additional procedures in some regulatory statutes, most of which occurred in the 1970s, reflects in part the influence of pre-vermont Yankee court decisions and the congressional view that the APA procedures, standing alone, did not necessarily ensure adequate public participation or accuracy in agency rulemaking decisions or provide an adequate basis for judicial review. Congress has also sought to control and expedite agency rulemaking by imposing statutory deadlines for completing rulemaking actions. Congress has been particularly concerned about agency delay and inaction in the public health and environment areas. Thus, for example, the Asbestos Hazard Emergency Response Act of required the EPA to publish an advance notice of proposed rulemaking within 60 days of enactment, a proposed rule within 180 days, and final rules within 360 days for seven specific areas relating to asbestos-containing materials in school buildings. 58 Many other agency statutes have included deadlines for agency rulemaking action. 59 Typically, these statutory deadlines can be enforced 53. For example, under the Occupational Safety and Health Act, the agency is required to hold a public hearing if an interested person files written objections to a proposed rule and requests a public hearing on such objections. 29 U.S.C. 655(b)(3). See 29 C.F.R (d) (implementing 29 U.S.C. 655(b)(3)). 54. See, e.g., Federal Trade Commission Act, 15 U.S.C. 57a(c)(2)(B). 55. See, e.g., Consumer Product Safety Act, 15 U.S.C. 2058(f)(3). 56. See, e.g., FTC Act, 15 U.S.C. 57a(e)(3); Occupational Safety and Health Act, 29 U.S.C. 655(f). The substantial evidence test as applied to informal or hybrid rulemaking has been widely discussed in court decisions. See also discussion infra Part IV, ch. 2(A)(6). 57. Pub. L. No , 100 Stat (codified at 15 U.S.C ). This Act amended the Toxic Substances Control Act U.S.C. 2643(a). 59. For example, the Federal Aviation Administration (FAA) Administrator is directed by statute to issue a final regulation, or take other final action, not later than 16 months after the last day of the public comment period for the

16 16 A Guide to Federal Agency Rulemaking only by court suits; 60 however, in some cases, Congress has added socalled hammers 61 or other penalties if an agency fails to take timely action. An example of a statutory hammer is the provision in the 1984 amendments to the Resource Conservation and Recovery Act, providing the EPA with a specified period of time in which to issue regulations; if at the end of that time it had not acted, the hammer would fall that is, a congressionally specified regulatory result would go into effect. 62 The Nutrition Labeling and Education Act of contained a similar hammer specifying that the agency s proposed rule would go into effect if the final rule were not issued within the statutory time limit. 64 New bioterrorism legislation gave the Department of Health & Human Services/FDA 18 months to issue proposed and final rules for registration of food imports, and included a hammer provision stipulating, in effect, that if the rules were not finalized by the deadline, import- regulations or, in the case of an advanced notice of proposed rulemaking, if issued, not later than 24 months after the date of publication in the Federal Register of notice of the proposed rulemaking. 49 U.S.C. 106(f)(3)(A). But see U.S. GEN. ACCOUNTING OFFICE, AVIATION RULEMAKING: FURTHER REFORM IS NEEDED TO ADDRESS LONG-STANDING PROBLEMS (GAO ) (July 2001) (finding that the reforms did not improve rulemaking times). It was estimated that Congress imposed about 600 deadlines in various environmental statutes between 1970 and 1983 and added 60 more in the Hazardous and Solid Waste Amendments of Alden F. Abbott, The Case Against Federal Statutory and Judicial Deadlines: A Cost-Benefit Appraisal, 39 ADMIN. L. REV. 171, 173 (1987). See also Alden F. Abbott, Case Studies in the Costs of Federal Statutory and Judicial Deadlines, 39 ADMIN. L. REV. 467 (1987) (exploring wasted resource costs, agency resource misallocation costs, and regulatory inefficiency costs in context of 11 case studies of deadlines). 60. The issues of court enforcement of statutory deadlines and, more generally, of suits to compel agency action are discussed infra Part IV, ch See Sidney A. Shapiro, Congress New Direction in Administrative Law, 13 ADMIN. L. NEWS 8 (Spring 1988) U.S.C. 6924(d)(1-2). 63. Pub. L. No , 104 Stat (codified as amended in scattered sections of 21 U.S.C.). 64. See M. Elizabeth Magill, Congressional Control over Agency Rulemaking: The Nutrition Labeling and Education Act s Hammer Provisions, 50 FOOD & DRUG L.J. 149, (1995) (describing FDA s failure to meet strict congressional deadlines for issuance of final nutrition labeling regulations).

17 Part 1: Overview of Federal Agency Rulemaking 17 ers could register as they pleased. 65 And one memorable rider to an appropriations act withheld a portion of the budget of several agency offices until particular final rules were issued. 66 The Administrative Conference questioned the value of statutory rulemaking deadlines, 67 as have a number of commentators. 68 Congress continues to impose these deadlines, however, and they often are an important factor in court litigation to force agencies to initiate or complete rulemaking activity. 69 Congress also seeks to monitor agency rulemaking after its completion. Prior to 1983, Congress had incorporated legislative veto provisions into many statutes authorizing agency rules. 70 Such statutes typically provided for review of final agency rules by one or both houses of Congress. In 1983, however, the Supreme Court held in Immigration and Naturalization Service v. Chadha 71 that a statutory 65. Public Health Security and Bioterrorism Preparedness and Response Act of 2002, Pub. L. No , 305(e), 116 Stat. 594, 669 (June 12, 2002). Interim-final rules were issued October 10, 2003, 68 Fed. Reg. 58, See Department of Transportation and Related Agencies Appropriations Act, 1988, Pub. L. No , Title 1, 101 Stat /359 (Dec. 22, 1987) (providing that 5% of appropriated funds be withheld from the Office of the Secretary and Office of General Counsel until several enumerated final rules are issued), cited in Neil R. Eisner, Agency Delay in Informal Rulemaking, 3 ADMIN. L.J. 7, 33 n.162 (1989). See also Department of Transportation and Related Agencies Appropriations Act, 1990, Pub. L. No , 106 Stat (Oct. 6, 1992) (providing that no funds can be used for pay raises for FAA employees responsible for preparing environmental impact statement until it is prepared). 67. Administrative Conference of the United States [hereinafter ACUS] Recommendation 78-3, Time Limits on Agency Actions, 43 Fed. Reg. 27,509 (1978). All ACUS Recommendations are available at See Note on ACUS, supra at xix. 68. See articles cited supra note See cases discussed infra Part IV, ch An inventory of these statutes through 1983 appears as an appendix to the dissenting opinion of Justice White in INS v. Chadha, 462 U.S. 919, (1983). The appendix lists 56 statutes with provisions authorizing postpromulgation congressional review. Id U.S. 919 (1983).

18 18 A Guide to Federal Agency Rulemaking provision authorizing a one-house veto of the suspension of a deportation order by the Attorney General violated the separation of powers doctrine and was therefore unconstitutional. 72 Subsequently, the Supreme Court applied Chadha to two-house vetoes and to vetoes of rules issued by administrative agencies. 73 Although the legislative veto in its classic sense no longer is an option for congressional control of rulemaking, 74 in 1995 a congressional review-of-rules procedure was enacted. The law delays the effective date of major rules for at least 60 days and provides expedited procedures for congressional consideration of resolutions of disapproval. 75 The overall scheme, while fraught with complexities, 76 appears to avoid Chadha problems because it requires bicameral passage of joint resolutions and presentation to the President for signature or veto. Only one rule has been disapproved, 72. The Chadha decision was the subject of extensive discussion. See, e.g., E. Donald Elliot, INS v. Chadha: The Administrative Constitution, the Constitution, and the Legislative Veto, 1983 SUP. CT. REV United States Senate v. FTC, 463 U.S (1983) (holding unconstitutional FTC Improvements Act provision authorizing two-house vetoes of FTC rules), aff g Consumers Union v. FTC, 691 F.2d 575 (D.C. Cir. 1982); Process Gas Consumers Group v. Consumers Energy Council of Am., 463 U.S (1983) (mem.), aff g Consumer Energy Council of America v. FERC, 673 F.2d 425 (D.C. Cir. 1982) (holding one-house legislative veto in Natural Gas Policy Act of 1978 unconstitutional). 74. See William F. Leahy, The Fate of the Legislative Veto After Chadha, 53 GEO. WASH. L. REV. 168 (1984). The impact of Chadha on existing legislative veto provisions remains an issue. Congress has amended several statutes to delete unconstitutional legislative vetoes. However, many statutes containing pre-chadha legislative vetoes remain unchanged. The Supreme Court addressed the severability of such provisions in Alaska Airlines v. Brock, 480 U.S. 678, (1987) (finding the legislative veto provision severable). See also New Haven v. United States, 809 F.2d 900 (D.C. Cir. 1987) (holding the legislative veto provision nonseverable). 75. The Small Business Regulatory Enforcement Fairness Act of 1996, Pub. L. No , Title II, subtitle E, 110 Stat. 856 (codified at 5 U.S.C ). See infra Part II, ch. 3(J), for a detailed discussion of the congressional review-of-rules provision. 76. See infra Part III, ch. 7(A)(6)(b); Daniel Cohen & Peter L. Strauss, Congressional Review of Agency Regulations, 49 ADMIN. L. REV. 95 (1997) (discussing the Small Business Regulatory Enforcement Fairness Act of 1996).

19 Part 1: Overview of Federal Agency Rulemaking 19 and thus voided, under this process, but it, an ergonomics rule promulgated by the Occupational Safety and Health Administration (OSHA) at the end of the Clinton Administration, was a major one. 77 Even beyond this new congressional review process, however, Congress retains other means for overseeing agency rulemaking activity. Statutory requirements limiting agency rulemaking discretion, discussed above, continue to be an important method of congressional control, as are appropriations riders. 78 Another method is the exercise of congressional oversight authority, either by formal or by informal means. 79 Congressional committees frequently hold oversight hearings on rulemaking issues and, in some cases, file reports expressing strong views on agency performance on particular matters. 80 Informal contacts between agency rulemakers and members of Congress and congressional staff in connection with rulemaking are also frequent. 81 In Sierra Club v. Costle, 82 the D.C. Circuit held that it was entirely proper for congressional representatives vigorously to represent the interests of their constituents before administrative agencies engaged in informal, general policy rulemaking, so long as the individual Members of Congress do not 77. Pub. L. No (Mar. 20, 2001), invalidating OSHA s ergonomics program standard issued on Nov. 14, 2000 (65 Fed. Reg. 68,262). 78. See, e.g., Pub. L. No , 111 Stat (1997), one of a series of riders prohibiting OSHA from using any appropriations to promulgate or issue any proposed or final standard regarding ergonomic protection. 79. There is an extensive literature on congressional oversight activity. See, e.g., WALTER J. OLESZEK, CONGRESSIONAL PROCEDURES AND THE POLICY PROCESS (3d ed. 1989); R. DOUGLAS ARNOLD, CONGRESS AND THE BUREAUCRACY: A THEORY OF INFLU- ENCE (1979). 80. See, e.g., House Comm. on Energy and Commerce; Subcommittee on Oversight and Investigations, Report on EPA s Asbestos Regulations: A Case Study on OMB Interference in Agency Rulemaking, 99th Cong., 1st Sess. (Oct. 1985) (criticizing the EPA decision not to regulate asbestos under the Toxic Substances Control Act). EPA reversed its position and initiated a rulemaking. 51 Fed. Reg (1986). 81. See, e.g., JEFFREY M. BERRY, FEEDING HUNGRY PEOPLE: RULEMAKING IN THE FOOD STAMP PROGRAM (1984) F.2d 298 (D.C. Cir. 1981).

20 20 A Guide to Federal Agency Rulemaking frustrate the intent of Congress as a whole as expressed in statute, nor undermine applicable rules of procedure. 83 Congress also controls agency rulemaking procedure by enacting generic procedural statutes, such as the National Environmental Policy Act, 84 the Paperwork Reduction Act, 85 and the Regulatory Flexibility Act. 86 These statutes, which are designed to improve the quality of agency decisionmaking and further policy goals set forth in the statutes, have had a significant impact on the rulemaking process. 87 D. Agency Rulemaking and the President Perhaps the most significant administrative law development during the last two decades has been the increased presidential involvement in federal agency rulemaking. 88 This presidential review, exercised by the Office of Management and Budget s (OMB s) Office of Information and Regulatory Affairs (OIRA) has been the result of numerous executive orders 89 as well as enactment of the Paperwork Reduction Act. 90 According to recent testimony of the OIRA Administrator, 83. Id. at 409. See discussion infra Part III, Ch. 6(D) U.S.C d U.S.C U.S.C See infra Part II, ch. 3, and Part III, ch. 2, for discussions of these and other generic statutes. 88. See the comprehensive review in Elena Kagan, Presidential Administration, 114 HARV. L. REV (2001). See also the companion book published by the ABA Section on Administrative Law and Regulatory Practice, A GUIDE TO JUDICIAL AND POLITICAL REVIEW OF FEDERAL AGENCIES , (John F. Duffy & Michael Herz eds., 2005). 89. Exec. Order 12,291, 3 C.F.R. 127 (1981 compilation); Exec. Order 12,498, 3 C.F.R. 323 (1985 compilation) (providing guidance on regulatory planning process); Exec. Order 12,606, 3 C.F.R. 241 (1987 compilation); Exec. Order 12,612, 3 C.F.R. 252 (1987 compilation); Exec. Order 12,630, 3 C.F.R. 554 (1988 compilation); Exec. Order 12,866, 3 C.F.R 644 (1993 compilation). All these executive orders are reprinted in 5 U.S.C. 601 note. Exec. Order 12,866 is reprinted in the Appendix B to this Guide. 90. Pub. L. No , 109 Stat. 163 (1995) (codified at 44 U.S.C ). The Paperwork Reduction Act superseded the Federal Reports Act of 1942, Pub. L. No , 56 Stat

21 Part 1: Overview of Federal Agency Rulemaking 21 Since OMB began to keep records in 1981, there have been 109,710 final rules published in the Federal Register by federal agencies. Of these published rules, 20,029 were formally reviewed by OMB prior to publication. Of the OMB-reviewed rules, 1,073 were considered major or economically significant rules, primarily because they were estimated to have an economic impact greater than $100 million in any one year The Development of Presidential Review Presidential oversight of regulation is not a recent innovation. It has been in effect, in one form or another, since 1971, 92 and it accompanied a major expansion in the scope and complexity of federal regulation that occurred in the 1960s and 1970s when a number of important social and environmental regulatory statutes were enacted. 93 In June 1971, President Nixon established a Quality of Life Review program, under which all significant draft proposed and final rules were submitted to OMB, which circulated them to other agencies for comment. 94 Agencies were required to submit a summary of their proposals, a description of the alternatives that had been considered, 91. Regulatory Reform, Hearing before the House Subcommittee on Energy Policy, Natural Resources and Regulatory Affairs, 108th Cong. (Nov. 17, 2004) (statement of John D. Graham, Administrator of OIRA), available at _graham_reg_reform.html. 92. See Harold H. Bruff, Presidential Management of Agency Rulemaking, 57 GEO. WASH. L. REV. 533 (1989) (discussing evolution of presidential supervision); Caroline DeWitt, Comment, The Council on Competitiveness: Undermining the Administrative Procedure Act with Regulatory Review, 6 Admin. L.J. Am. U. 759 (1993). 93. See Robert. L. Rabin, Federal Regulation in Historical Perspective, 38 STAN. L. REV (1986) (providing an excellent history of government regulation). 94. See Memorandum to Heads of Departments and Agencies from George P. Schultz, Director, OMB, Agency Regulations, Standards and Guidelines Pertaining to Environmental Quality, Consumer Protection, Occupational and Public Health and Safety (Oct. 5, 1971), cited in William F. Pedersen, Jr., Formal Records and Informal Rulemaking, 85 YALE L.J. 38, 52 n.61 (1975).

22 22 A Guide to Federal Agency Rulemaking and a cost comparison of alternatives. In practice, this program applied to rules pertaining to environmental quality, consumer protection, and occupational health and safety. In 1974, President Ford issued an executive order requiring executive branch agencies to prepare an inflation impact statement (IIS) for each major federal action. 95 The order empowered the director of OMB to administer the program, with authority to delegate functions to other agencies, including the Council on Wage and Price Stability (COWPS). 96 Under the IIS program, agencies were required to prepare an IIS for major rules 97 prior to publication of the notice of proposed rulemaking (NPRM) and then to forward a summary of the IIS to COWPS upon publication of the NPRM. 98 COWPS would review the IIS and, in its discretion, offer informal criticism of the proposal or participate in the public proceedings on the rule. 99 President Carter continued presidential review of agency rules by means of Executive Order (E.O.) 12,044, issued in Under the order, executive agencies were required to (1) publish semiannual agendas describing and giving the legal bases for any significant regulations under development by the agency; (2) establish procedures to identify significant rules, to evaluate their need and to have the agency head ensure that the least burdensome of the acceptable 95. Exec. Order 11,821, 3 C.F.R. 203 ( compilation). When the executive order was later extended, the inflation impact statement was replaced by an economic impact statement to better reflect the required analysis, which could be characterized as a loose cost-benefit analysis. See OMB Circular No. A-107, 4(d) (Jan. 28, 1975), cited in Charles W. Vernon III, Note, The Inflation Impact Statement Program: An Assessment of the First Two Years, 26 AM. U. L. REV. 1138, 1141 n.28 (1977). 96. See Vernon, supra note 95, at Originally, agencies were left to develop their own criteria for determining what was a major proposal, subject to OMB approval; eventually, COWPS adopted a list of suggested criteria that essentially defined a major proposal as one entailing a cost of $100 million or more in one year or $150 million or more in two years. See Note, Regulation Analyses and Judicial Review of Informal Rulemaking, 91 YALE L.J. 739, 746 n.51 (1982). 98. Vernon, supra note 95, at Id C.F.R. 152 (1978 compilation).

23 Part 1: Overview of Federal Agency Rulemaking 23 alternatives was proposed; and (3) prepare a regulatory analysis that examined the cost-effectiveness of alternative regulatory approaches for major rules. President Carter also established a Regulatory Analysis Review Group to review the regulatory analyses prepared for a limited number of proposed major rules and to submit comments on the proposed rules during the public comment period. 101 He created another rulemaking review body, the Regulatory Council, which was charged with coordinating agency rulemaking to avoid duplication of effort or conflicting policy in regulation of any area. 102 These efforts to coordinate agency rulemaking were challenged unsuccessfully in several lawsuits. 103 President Reagan acted quickly after taking office to increase control over executive branch rulemaking. On February 17, 1981, he issued an executive order on federal regulations designed to reduce the burdens of existing and future regulations, increase agency accountability for regulatory actions, provide for Presidential oversight of the regulatory process, minimize duplication and conflict of regulations, and insure well-reasoned regulations. 104 The new E.O. 12,291 replaced E.O. 12,044, which President Reagan said had proven ineffective. 105 E.O. 12,291 contained both substantive requirements and procedural steps to be followed in the development and promulgation of new rules. 106 The Office of Information and Regulatory Affairs in OMB Fed. Reg. 12,668 (1978) Memorandum from President Carter to executive departments and agencies, Strengthening Regulatory Management (Oct. 13, 1978). The Regulatory Council included the heads of all executive branch agencies and the heads of any independent agencies that chose to participate on a voluntary basis See Michael S. Baram, Cost-Benefit Analysis: An Inadequate Basis for Health, Safety, and Environmental Regulatory Decisionmaking, 8 ECOLOGY L.Q. 473, (1980) (discussing the controversy over use of cost-benefit analysis); Paul R. Verkuil, Jawboning Administrative Agencies: Ex Parte Contacts by the White House, 80 COLUM. L. REV. 943, (1980) Exec. Order 12,291, 3 C.F.R. 127 (1981 compilation) OFFICE OF THE VICE PRESIDENT, FACT SHEET ACCOMPANYING EXECUTIVE ORDER ON REGULATORY MANAGEMENT 2 (1981) See infra Part III, ch. 2(A) for a discussion of the order s requirements.